Cloud vs on-premise (servers, storage, firewalls in your server room)

At first glance, an unfair fight. Cloud is starting to crush on-premise. Will the trend continue? Are there caveats?

At first glance it looks like a one-sided fight. Cloud is starting to crush on-premise *1. Will the trend keep going? Are there any "buts"?

The trend is clear, so let's recap the basic differences between cloud and on-premise. With this overview you'll quickly see the advantages, features, and pitfalls of each — on-premise vs cloud. Right at the start, I'd like to flag one fundamental misconception:

"We have everything in the cloud, so we don't need to worry about anything."

This mindset is a ticket to a metaphorical hell — I covered the topic of shared responsibility (shared responsibility model *2) in one of the previous articles on our blog.

Cloud & on-premise definitions:

On-premise infrastructure

• This is IT equipment (servers, storage, switches, firewalls, etc.) that you find in your company's own premises.
• Your IT department — or an external IT firm running your IT, either through outsourcing or so-called managed services — is responsible for all maintenance.
• Total cost of ownership (TCO) also has to include electricity costs and any other operating costs (audits, certifications, etc.).

Cloud (or cloud services)

• Imagine the same thing you run in your server room, but much larger, unified, scalable, elastic, and most importantly shared between multiple customers (doesn't apply to private cloud).
• Cloud providers will tell you it's also far more secure, but expert opinions diverge here.
• Another typical feature of cloud services is pay-as-you-go billing, plus access to the latest (updated) versions of operating systems and services.
• You don't worry about hardware itself — power consumption, internet connectivity, and an availability guarantee are part of the price.

Types of cloud services:

Public cloud

• Public cloud is the model most people think of as "cloud".
• Typical examples: Microsoft Azure, Microsoft 365, Amazon AWS, or Google.
• Individual customers are split into so-called tenants, isolated from each other.
• Service availability is defined by an SLA.
• Service costs are billed monthly based on usage — pay-as-you-go or via prepaid credits.
• The price typically includes any licences used, but there are scenarios where customers can "bring" an on-premise licence. Cloud providers use this to encourage customers to move to the cloud.

Private cloud

• The fundamental difference between private and public cloud is that resources aren't shared between multiple customers.
• Why? Several reasons. It can be regulatory or security requirements, or licensing constraints. For example, you may have an Oracle database licence whose terms don't allow operation in the public cloud.

Hybrid cloud

• A combination of public cloud with your on-premise infrastructure, or with a private cloud.
• This scenario is very common in larger IT estates.
• Cloud and on-premise share the same user identities; some compute resources sit on-premise and some in the cloud, depending on current need.

The buzzword of late: multi-cloud

• Plainly put: a maximally efficient combination of multiple cloud providers, including hybrid multi-cloud.

Cloud-service delivery models:

SaaS – Software as a Service

• Let's start with what we all know well. Microsoft or Google services for storing files, sending mail, doing video calls — Microsoft 365 or Google Workspace.
• You pay for the service itself; the cloud provider handles almost everything for you, from availability through scalability to security.
• Mind the shared responsibility — secure tenant configuration, identity (user) security, and data backup remain your job.

IaaS – Infrastructure as a Service

• This is probably the simplest case: you don't worry about hardware, but buy infrastructure pieces and assemble them as you wish.
• Servers, storage, firewalls, etc.
• Typical examples: Microsoft Azure, Rackspace, Amazon Web Services (AWS).

PaaS – Platform as a Service

• Here you buy — or rather rent — infrastructure components needed to run your systems or apps.
• Examples: Azure App Services, Azure CDN, or development platforms like Salesforce.
• One catch: vendor lock-in.
• Migrating away from a platform on which your entire system is built will be very hard down the road.

Cloud vs on-premise comparison:

1) Scalability and flexibility

• Scalability — most IT experts agree here. With server, storage, and firewall lead times running 6+ months, scalability and flexibility clearly favour cloud.
• Flexibility — if your business has seasonal patterns or simply periods when "it doesn't have to run", cloud collects the points.
• Example: virtual desktops for your staff — VMs can run, say, 7:30–21:00 and then auto-shut. While they're not in use, you save.
• The same applies to apps written for the cloud. Compute capacity scales to current need. Yes, this makes perfect sense.

2) Initial and operating costs, availability

• For systems (apps) designed from the ground up to run in the cloud, the initial-cost and availability metrics are favourable too — especially for smaller projects.
• Where can the trap be? Insufficient experience operating apps in the cloud, complex price prediction (doesn't apply to SaaS), and inflated expectations that the cloud solves everything.
• Operating costs in more complex scenarios can be quite high.

3) Cloud computing — global expansion

• If you plan worldwide expansion, you'll most likely have to use cloud. Doing it on-premise will be very complex, expensive, and inefficient.

4) Technical debt — innovation

• Cloud providers are unforgiving here.
• They simply force you to keep innovating. There's no place for legacy tech in the cloud.

5) Security

• And we get to the most contentious topic. Cloud and security. Two entrenched camps in IT. One says cloud solves everything and is super secure; the other says cloud is itself a security problem.
• Cloud providers have all manner of certifications, but companies often forget the so-called shared responsibility model.
• As the count of cloud technologies and companies using them grows, so does the count of security incidents.
• These problems are almost daily, so beyond cloud you also have to address cybersecurity and minimize all attack vectors.
• Cloud is definitely not a fix for security problems.
• It's not possible to say whether on-premise or cloud is more secure. Both have security issues of their own.

You could simplify and say that cloud is usually the right choice for SMBs. For larger companies it's typically a mix of cloud and on-premise.

6) Lift and shift to cloud = not always a great idea

• This is usually the customer's first thought.
• "Let's take what we have on-premise and 'shove' it into the cloud."
• "It'll be cheap, secure, and highly available — things we couldn't do on-premise."
• If you run legacy applications (apps not natively designed for the cloud), I have to disappoint you.
• It'll be expensive, and it won't be much more secure either.

A reasonable scenario is to ditch outdated apps and solutions and move the data into cloud-native solutions.

7) IT support

• This is becoming a hot topic.
• Anyone who's opened a ticket with Microsoft or AWS knows how miserable it can be.
• You have a critical issue, and you can't get anyone on the phone.
• When you do, the person on the other end is an L1 with no real competence.
• Maddening — and ultimately expensive and inefficient.

I know of a few examples where companies moved from cloud back to on-premise, and honestly I don't blame them. But these were tech companies with great IT teams.

8) Outlook and my personal subjective take

Cloud's share will keep growing. The fastest growth will be in the SMB segment. On-premise operation will only suit companies with IT specialists with the right competencies and specific needs that the cloud delivers poorly = support availability, sometimes price, and control over how it all works = no black box.

How can we help? Considering one of these options? Looking for an independent opinion on whether a particular path is right for you, or a partner for a cloud migration? If your answer to any of these is yes, we'd be glad if you reached out.

Roman Krutina

1) Source: IDC https://www.theregister.com/2022/07/04/idc_cloud_spend_predictions/

2) https://aws.amazon.com/compliance/shared-responsibility-model/ — https://learn.microsoft.com/en-us/azure/security/fundamentals/shared-responsibility